Question:
Does renting actually have more benefits than home ownership does?
anonymous
2020-09-09 04:02:31 UTC
Most will say the opposite is true, but consider these points.

1. If I go from renting an apartment to paying a mortgage on a home, I'm still writing a monthly check to some guy in a suit, except he doesn't make any repairs.

2. If I don't like the way things are going in my apartment, or if the neighborhood starts going down hill, I'm never more than 12 months away from my lease being up, then I can pack up and leave.

3. Home ownership is an investment, and investments are gambles. You buy a home in a good neighborhood today, ten years from now it could be a ghetto.

4. This goes back to number 2, but more pronounced. If I get a 30 year mortggage it will be ,many years before I've paid the interest down enough to gain any significant equity, to the extent selling it wouldn't COST me money.

Imagine I put a down payment on a house here in Virginia today, and six months from now, I get an offer for my dream job, except it's in Hawaii.

Imagine how expensive and time consuming it will be for me to get rid of that house?

With an apartment, I just pay an early termination fee for my lease and say: "It's been nice knowing you." 
33 answers:
Raymond L.
2020-09-13 01:27:12 UTC
If you have a 20% down payment, good credit and plan on being in the area for 5+ years then its a no brainer- buy a house.



as far as hawaii goes? Stop dreaming.



BTW at todays mortgage rates at 3.00% you will be putting away like 305 of your payment each month towards the principle.





BTW, do you like moving? I dont.
?
2020-09-10 04:02:35 UTC
yes it can , mathematics say  so , if you take out 300% for the cost of the house , plus other cost per year , value of for land rates , rubbish collection , water , gas , electricity , house insurance , not content , and not including general maintenance like hot water service every 12 years , heating , oven and other things . well work it out and see if house  ownership is great . If you rent , well no land rates , replacing costs of heating and no maintenance , renting actually is better than buying in the end .houses have this habit of eating your money .
anonymous
2020-09-10 03:12:19 UTC
It is a yes & no answer.



The benefits when you are renting will be :



1. You are just paying the rental & if you found another cheaper house for rent, you  

    can move on.

2. The total amount spend on rental could be less than buying a house depending 

     on the price of the house. Example : total cost for rental for 30 years is 360k 

     assuming rental per month is 1k. The cost of the house is 400k or above.

3. If you are moving to a new place, you can easily give a notice & move.



The disadvantage for renting will be :



1. When you left the house, you will not get anything.

2. If the house price is cheaper, then rental paid amount could be more than buying a      house amount.

3. If you can afford to buy the house, your next generation can use the house for free.

    Example : if you settle the mortgage for the house in 30 years, your next 

    generation can use the house for free for 50 years.
jake w
2020-09-09 17:29:29 UTC
It really comes down to where you see yourself in the future and your life plan. If you're going to have a family and a pet, no condo or duplex in the world is going to have enough space to house them comfortably...hence the ironic use of the word "house".

  I think an even bigger question is...."how much do I really need to be happy?". Sooooooooooooooooooo many people buy WAY outside of their needs and spend the rest of their life paying for it. There's nothing wrong with living in a one story house with a modest backyard if it means paying far less on your mortgage and being able to pimp out the interior with all the toys you now have your money for.



The single largest detractor to renting is not being able to modify the space you live in, period. I can't tell you how many headaches I've had waiting for a landlord to get his lazy butt in gear and fix something trivial that I could have fixed in five minutes, at great cost to himself/herself. Not being able to buy a fridge, washer, dryer, stove/oven, etc that is whisper quiet and ultra energy efficient is a pain in the *** as well.



So, in the long term, I would consider renting to have more benefits than home ownership if you're single, just living with a spouse, or just with a pet. Buying a house for two people is nonsense and will put you in more debt than you desire.

  If you're having a family though, everyone having their own space is far preferable to being crammed into a 1x1 and being at each other's throats all the time.
anonymous
2020-09-09 16:54:01 UTC
Not necessarily, although this Title Theft sounds like a new thing where they could easily rob you of real estate once you pay it off.
Christin K
2020-09-09 16:29:49 UTC
Sorry for the length of this answer, but it was a thoughtful question and deserves a thoughtful answer.





#1 and #2:  true enough. 



#3:  Investments in real estate are RARELY gambles. 99% of the time, a home APPRECIATES in value, even when the neighborhood doesn't. Generally speaking, this is one of the safest and most 'sure' investments you can make. The neighborhood is only part of the reason for buying a home--there are other factors that may out balance a bad or downhill neighborhood--and the neighborhood is always improved when responsible and caring homeowners move IN.  When house prices go lower, it's a magnet for those who want to flip houses--or buy them for rental units, or buy them cheaply for the future when they can be sold at a higher value. Also, taxes are usually lower in these neighborhoods. That's another attraction of buying in a depressed area or down-hill neighborhood--not only are you getting your property cheaper, you are getting a break on taxes--and oftentimes communities have grants and incentives for buying there so the neighborhood can be reclaimed or rehabbed. So as an investment, it's another way to say that you can buy low and sell high.  



#4: it takes almost no time at all to build up enough equity in a home. It definitely doesn't take "paying down the interest"--or waiting 'many years.'  Equity is not only what you are paying on your mortgage, it's the improvements you make to the property while you live there. You may find you have equity simply because you put in new plumbing or electrical wiring, or a new septic system.  





Overall, you're correct that a house costs you more to live in--with apartments, you don't normally have to pay maintenance and sometimes you only pay one utility or two--and with a house you are paying everything. Water, sewer, trash pickup, gas, electric, cable, etc. BUT--you also have control over these things. And if your monthly mortgage payment is significantly less than renting where you get those things paid for, it can actually be MORE cost-effective to live in a house.  You might be paying $1500 a month to live in a decently-sized apartment, where you may only be paying a total of $800, with mortgage AND utilities, to live in a house which is larger and more private. 





And that's another thing:  With a house, you have autonomy AND privacy. No one will be banging on your ceiling or walls when you're noisy--no one will care if you have a gas grill that gets smoky--no one will charge you extra for your pets or garage. No one will be spying on you from the balcony next door, or leaving trash in your hallways, or mucking up the laundry facilities--unless you do. 





Houses that are well-cared for sell quickly. And the seller almost always makes money on that sale--even if they haven't lived there very long. 





The biggest draw for apartment living is the mobility, not the value. In an apartment, your world is limited to the dimensions of the apartment--you own nothing else and control nothing else. But you CAN, as you say, pack up and leave quickly. And when you live in a large urban area, a house may not even be available for you to buy. People build and live vertically in cities--and horizontally in suburbs. You're also far less likely to have things like bed bugs, roaches or rats in a house than you are in a city apartment. You're less likely to have to smell your neighbors' cooking, hear their arguments, or deal with their messes. Sure--trees rarely fall on your roof, but you're going to be paying extra for parking your car. Sure, you can visit a deli at 3 AM, but you can't plant a garden either. 





There are trade-offs and advantages and DISadvantages to both ways of living. 
Slumlord
2020-09-09 15:06:39 UTC
All valid points but the value of a house goes up with inflation,as well as paying down the mortgage.  If you buy a 200k house, even if you never pay down the mortgage very much, it'll still be a 400k house in about 18-25 years (assuming about 3-4% inflation of home prices and ignoring other pricing effects) and you did nothing the whole time except live there, keep it decently repaired and pay your bills.  And your bills are probably about the same, possibly less, than you rent and they probably don't go up as fast as your rent if you got a fixed rate mortgage, since the mortgage payment is typically the largest cost, by far.



It is a risk as housing prices can go down, but buy carefully and in a good market and I'll bet the prices go up even faster than the above example.  I read that something like 90% of all people who save money do it primarily thru their real estate (typically from buying a house and living in it).  That statistic is like 30 years old but its still true to a degree and there is a reason for it.
curtisports2
2020-09-09 13:59:54 UTC
Those ARE the advantages of renting over owning, yes, BUT that very short list includes too many 'ifs'. And you are over-focusing on the short-term.  Of course if you plan to be moving around a lot, the advice is to hold off on buying until you settle in, for the reasons you state. But in many markets in the last ten years, that has not been true. People have earned substantial profits in just one or two years in hot markets.



The number one advantage in owning a home is the foundation you build in your financial picture. Studies have repeatedly shown that the biggest percentage of net worth for most Americans is, by far, the equity one has in their home. Most financial experts recommend that equity in a home be limited to 20% - 30% of total net worth.  That's smart, because in retirement, the paid--ff home produces no income. It's the other net worth you invested that produces income.  Yet, in this study from 2015, you can see that for most Americans, they are not saving enough money and most of their net worth IS locked up in the home.



https://www.fool.com/investing/general/2015/05/25/the-typical-american-has-this-much-in-home-equity.aspx



Still, it's better to have it than not to have it. Renting for 20+ years gives you a box of receipts.





The other advantages:



1.  No one telling you that you can't have pets, can't smoke, can't have guests staying overnight for more than X number of times a year.



2. No one telling you that you have to move when you want to stay.



3. Pride of ownership/sense of accomplishment.



4. Tax advantages in possible deductibility of property taxes and mortgage interest.  To the extent these are deductible, it lowers your net mortgage interest rate (see 6).



5. Fixed monthly payments. As taxes and property insurance go up (if included in the payment), the payments will go up slowly and gradually. Rents continue to rise. It would not be unusual for rent in the same place to be double what it started out as after 15-20 years.  That will NEVER happen with your home.



6. Using 'other peoples' money' to finance a purchase.  You can't borrow to rent (aside from short-term emergency borrowing).  Yes, you must make the payments and pay the property taxes and maintenance and repairs.  But over 30 years, this will be a small thing. 
linkus86
2020-09-09 04:52:49 UTC
It completely depends on your lifestyle.  If you like to move around a lot, renting is definitely the way to go.  But if not:



1. True.  No argument.

2. You can sell your house any time you like and usually can accomplish doing so in far less than 12 months.

3.  True, buying a home is an investment and there is no guarantee your value will increase.  Just a high likelihood aside from another housing crisis which isn't likely to happen.  But lets consider the down side to renting.  You can be certain your rent will increase over time costing you a whole lot more over 30 years that your mortgage payment will on a fixed rate mortgage, and that is beside the point you won't be accumulating any equity renting.

4.  It will likely only take 2-3 years for you to sell without taking a loss.  But moving apartments is almost a certainty you will take a loss either by being short changed in getting back your deposit, paying termination fees and application fees for future apartments.  Time consuming?  Not if you hire a realtor.  And you don't have to if you don't want to, but that would decimate your arguments.



Enjoy throwing your money away on rent.  When you find yourself paying twice the rent you pay today 15 years from now, you just might think back to that fixed rate mortgage payment you could have gotten on a 15 year mortgage and fully owned the property.
oil field trash
2020-09-09 04:10:40 UTC
When you spend money it just depends on how you spend it as to the result. I made a $10,000 profit on my first house, a $50,000 profit on the second house I bought and $145,000 on the third house I bought. 
Akshitha
2020-09-14 00:59:08 UTC
in general no you want to own the home you are renting out to. but it could be for someone who doesn't want to own a property with other responsibilities. (maintenince )
Karen L
2020-09-13 23:52:21 UTC
In some cases, yes. In others, no. The benefits of renting are usually short term ones. The benefits of owning are long term ones. I am retired now. If I wanted to rent a house like mine in the area I live in, I'd have to pay around 2/3 of my total income merely for rent. What it costs me to live in a house on 3 acres is half of what a tenant I know in this area pays for 2 rooms and a bathroom in someone else's basement. What it costs me to live in my house wouldn't even rent a single room in someone else's house. I don't have to move unless I want to. I can have all the pets I want, and I can paint it any colour I feel like. When I was a tenant, I had to move 3 times in one year because the landlord changed his mind about renting. I've never lived in a neighbourhood that went downhill. I chose where to buy sensibly, choosing neighbourhoods that weren't changing fast. I not only have a house to live in that I like, I have the benefit of knowing that if I can't stay in it for some reason, I have a house I can sell for enough to support myself for ten years or more as a tenant.



If you aren't sure if you want to stay in a place, renting works well. But unless you make a point of saving money every month and investing it sensibly, at the end of 30 years of renting you'll have nothing but some clothes and maybe some furniture. At the end of 30 years, I have a house worth ten times what my first house cost me. And some clothes and some furniture.
anonymous
2020-09-13 17:11:01 UTC
It varies from situation to situation. I would say yes. But at least you can't get evicted like really fast if you don't pay your house note.
?
2020-09-12 18:04:53 UTC
Financially, home ownership is generally better in the long run.  For most Americans, their greatest source of wealth is their home.  However, your point about bad neighborhoods is valid.  Back in the 70s, the neighborhood I grew up in declined from working class to hardcore welfare.  Crime became rampant, and my parents could not afford to move.  
anonymous
2020-09-12 17:47:29 UTC
There are exclusive benefits and disadvantages to both. 
anonymous
2020-09-12 14:33:00 UTC
You're not Middle Class until you buy. Rent goes up: the mortgage never does. A mortgage can be a write off, rent can't be. Equity is built up yearly. Most house go up, at least, $20,000 a year in value. Rent never has equity. Selling a house has never been hard (unless you want way too much). You can get a TWENTY year loan or even a 10 year mortgage for less than you think. I have a 20 year mortgage for $250K, my payment (2 insurances - major & minor, taxes, everything) is $1800 a month. Rent is $2500  - $3000(1st & last) a month). Once you buy, your FICO will be Excellent.
?
2020-09-12 11:33:42 UTC
If you’re not settled I one place, it makes sense to rent. If you intend being sonewhere   for  3 years or more, I would say buy.
Leafsfan29-Embrace the drought!
2020-09-11 19:35:05 UTC
Don't ever go into financial management with your advice.  



I've sold two homes; both sold within days of going on the market because I bought in good areas that are consistently in demand (netted just over CAD $600K).  If your home is priced appropriately and shows well (meaning you maintain it) it will sell.  Good neighbourhoods that have good schools don't turn into ghettos.  Show me a concrete example of that.  You can't.  



Yes- spending money on projects costs money but you get that money back when the value of your home goes up.  There are literally proven calculations as to how much a project will help.  I spent $10,000 on a new master bathroom last year and I'll get 1.5-2 times that in home value increase.  



The only tangible negative impact to home values over the last 30 years was the 2008-10 financial crisis, largely of the financial industry's own making.  It was fraud on multiple fronts; a self-inflicted wound, if you will.  On a macro-level COVID hasn't impacted home values.  Who's getting hosed are renters.  That would be YOU.



One thing you forget: in the vast majority of rental markets, there's no rent control which means that landlords can jack your rent up and you have landlords opting to go the Airbnb route which removes inventory and ultimately means you pay more due to limited supply.  So 'maybe' you're paying $1500/mo for an apartment, but in 12 months it could be $2,000 or $2,500 and the comps in your city might be even higher, and you have zero recourse (nationally, rents go up around 6% a year based on available data although there are numerous spikes, usually in high demand areas).  



My mortgage rate is fixed however I'm paying less now than I first was due to a re-financing that knocked $300/month off my mortgage (I'm on a 15-year mortgage which means that next year I own a home that has more than doubled in value and will EASILY sell for seven figures).  Guessing your rent has skyrocketed over that period (oh wait...it has).  But please, tell yourself that you're making out (you're not).  If you want to continue to burn money fill yer boots.



As to your fantasy-land move, any company asking you to move to Hawaii helps you with relocation costs, including helping you with the sale of your existing home and will help you find a place to live.  They also help you with breaking your lease if need be.  I've gone through this process twice.  Are all Americans this delusional?  "Oh- what happens if I land my dream job; how will I sell my home?"  



You could always...rent it out.
mom
2020-09-11 12:43:07 UTC
when you rent a home or an apartment, you have to follow rules. if you want a dog or car, you have to ask if you can and pay a deposit for each dog or cat. if you own a home, you can do what you want and fix up and not have to ask anyone if you can fix it up and if you want a dog or cat, you do not have to ask anyone. try not to buy a house where their is HOA because they watch everything you do
anonymous
2020-09-10 22:34:34 UTC
Honestly I will never rent a home.why?

If u rent you’ll never own a home most of the time because majority of your check is going to rent.so you will never be able to save and rent is usually higher than a mortgage so the landlord can make profit.also renting goes up every year and most people aren’t making enough that’s why we have many evictions going on now.



Buying a house is way harder but more awarding because it’s something that is yours.i rather live with family and save my money for a couple years instead of renting.



The only reason renting you will benefit is if u move a lot like in the military you can rent and not have contract because your doing a Federal service and your moving around all the time.
?
2020-09-10 13:02:12 UTC
1.  So you are paying for the place either way, got it.  

2.  True.  Most people pick the location of their home pretty carefully though.  

3.  True, or it could be even better.

4.  Sort of true, but not really.  This also assumes zero gain in value.  



If you bought in a good area that has sustained being good for a long time, then selling is easy, because lots of people want to live there.



The problem with your argument is that you are assuming the absolute worst case scenarios.
anonymous
2020-09-10 01:59:35 UTC
The couple across the street pays $950 a month. They have been here 6 years. Spent $68,400. The man who owns the house paid about $75,000.  Property taxes of roughly $750 a year.



So by renting, they saved $750 a year, or $4500. Spent $68,400 to save $4500. Good idea ?
Bruce
2020-09-09 20:04:49 UTC
You can't compare your rent with paying for mortgage home. I'll suggest you go an investment with Annie Fox on Facebook 
?
2020-09-09 19:17:20 UTC
You seem to be comparing "rent an apartment" vs. "buy a house." An apartment is a lot smaller than a house, so (in a similar neighborhood) it will be a lot cheaper. The valid comparison is buying vs renting a house, or buying a condo vs renting an apartment.



As several of your points noted, it really depends on how long you are going to stay in the home. If you really might pack up and leave for Hawaii, don't buy real estate.Logically, if a renter is paying a landlord and the landlord is paying a mortgage, the rent must exceed the mortgage, or the landlord would go out of business. So it's the transaction costs that make frequent buying and selling cost more.And then there are matters of preference. You want somebody else to be responsible for repairs. Other people want control over the repairs or want to make changes to the house.
jbkl
2020-09-09 14:22:54 UTC
If you rent you have to like going to protest strikes with a big sign that says 'No Rent' these days!  But seriously, don't buy in the cities for the time being if you decide to take on a mortgage till things calm down. Buy rural or fringe suburbs for the next few years. If you work remote, buy ski or beach property as a primary home. Us people in STEM paid off our mortgages a lot sooner than 30 years,...more like 15, some less.. Get a good job, don't divorce, stay healthy and off drugs,.... you'll knock out a mortgage pretty quickly. I don't subscribe to these financial gurus that say you become 'born again' after paying off a mortgage though,...more bills wait on the other side!
?
2020-09-09 12:06:51 UTC
For me, everything else apart, the biggest benefit in owning your own property is SECURITY.   As long as you keep up your mortgage payments, you can't be evicted.

 

On the other hand, our current rental, where we've been since 2008 had a new central heating system installed when the original system failed and just a week ago, a new roof when we had a major leak.   All other smaller problems have been sorted ouit and paid for.   Yes we pay rent which could have gone into our own property, but our situation hasn't allowed for that.
Maxi
2020-09-09 11:34:46 UTC
1; however it is YOUR property so you are not throwing away money and ending up with nothing

2; You sell and move and that can be done within weeks

3; people creatw ghettos...your own home you look after it and if an area is going downhill you sell and move

4; That is not how it works...a mortgage is a loan, property prices don't stay the same, the property I purchased in 2001, more than doubled in price by 2004...I paid cash but even if I had had a mortgage I would have been 3 yrs in paying and  with 100k equity

5 sell the house or rent it out

6 You have never sold a house have you? It is not expensive or time consuming

7 ...and you walk away owning nothing all the rent you paid is thrown away.... long may people like you want to be a tenant, so landlords can make an income from you
sunshine_mel
2020-09-09 10:32:30 UTC
1 - yes; the downside of home ownership is that you're responsible for all repairs 

2 - yes; you can move much more easily 

3 - perhaps; but you'll still own a home
SumDude
2020-09-09 09:42:48 UTC
Actually - no. In the short term - yes. And yes longterm for some people. P S I have not written a mortgage check to a guy in a suit; and yet my house keeps appreciating 10% per year, so I can more than afford to pay for repairs.
A Hunch
2020-09-09 04:15:02 UTC
1. Every time you make that payment, you are gaining a greater percentage of personal ownership.

When you pay rent, there is never a personal ownership.2. Yes, renting provides much greater flexibility. 

3. 10 years is  pretty quick turn around from nice neighborhood to ghetto.4.  You don't gain equity solely by paying down a mortgage.

Few people are looking for major life moves right after home purchasing.  If that's you, look at #2 and home ownership might not be for you.Home ownership isn't for everyone.  And, in many markets, it's not a great investment. 
Who
2020-09-10 17:54:03 UTC
 1) - the amount you pay in interest when buying depends only on the interest rate

       the amount you pay in rent depends on market forces

   

2) same applies with a mortgage - but you can sell up anytime and not have to wait a year



3) you buy a home today and the neighbourhood starts going down - why on earth would you wait 10 years to sell?

    Besides - what if the neighbourhood starts going UP - your house value will also go up but you will still be paying the same mortgage. BUT when renting your rent will ALSO go up)



4) what do you care?

   no matter HOW long you rent you will NEVER stop paying it until you die

  (facts-

1st house I bought there was a housing shortage

     I was offered 10% of the selling price NOT to buy cos the guy was desparate

     I sold the house 3 years later with a 60% profit

     I then bought anther a few years later

  I sold it 20 years later for 30 times what I paid for it

   AFTER I sold I had enough cash left over to buy a smaller house outright AND had enough money left to live comfortably 

  I havent had a job for 20 years and aint had a mortgage or paid rent in nearly 25 years

  You might think I was lucky while a lot havent been - thats why you might regard it as a "gamble" - but it pays to research WHERE and WHEN to buy before you do

  you may think that was "luck" but it wasnt- I do my research (a lot of it) before I decide when and when and what to buy before doing it

  That changes if from a gamble to a calculated risk



As I happened My gf rented with 2 other girls ONE of the 2 had bought the house (3 bed) and was renting 2 beds to the other 2

 I calculated that the rent the 2 were paying would pay her mortgage - So she had 2 options - add their rent to her "virtual" rent and pay down the mortgage quicker (I reckoned she could pay it off in 7-10 years)

OR just live the good life with the excess income She did the second option

 NOT only that by sharing with 2 others instead of paying it all herself her bill for utilities came down by 2/3

 

you think renting is better then go for it



(1 would not buy at the moment cos interests is at an historic low - it can only go in 1 direction - up. WHEN that happens house prices will fall cos a lot of people will default)
?
2020-09-09 23:52:22 UTC
No it does not have MORE benefits
SCATTY c
2020-09-09 07:09:12 UTC
Does renting actually have more benefits than home ownership does? - probably not. But depends on what you call a benefit and your current lifestyle.

1. If I go from renting an apartment to paying a mortgage on a home, I'm still writing a monthly check to some guy in a suit, except he doesn't make any repairs - true. But what you forgot to mention, if you are writing a mortgage check after x period of time, you no longer have to pay. You write rent checks till the day you die



2. If I don't like the way things are going in my apartment, or if the neighborhood starts going down hill, I'm never more than 12 months away from my lease being up, then I can pack up and leave - again true. But what you forget to mention with never being more than 12 months from your lease being up, is you are  also never more than 12 months away from your landlord not renewing that lease and you having to look for a new place to live.



3. Home ownership is an investment, and investments are gambles. You buy a home in a good neighborhood today, ten years from now it could be a ghetto - again true. But property ownership is pretty much guaranteed as a safe bet



4. This goes back to number 2, but more pronounced. If I get a 30 year mortggage it will be ,many years before I've paid the interest down enough to gain any significant equity, to the extent selling it wouldn't COST me money - wrong!. Depends on how quickly house prices rise and mortgage rates are historically low at presentImagine I put a down payment on a house here in Virginia today, and six months from now, I get an offer for my dream job, except it's in Hawaii - well, buying is long-term. If you are looking to leave the area, then it makes no sense to buy a property there



With an apartment, I just pay an early termination fee for my lease and say: "It's been nice knowing you." - agreed. If you don't want to stay in the area then don't buy.



But longer term, it will pay to have your own place!


This content was originally posted on Y! Answers, a Q&A website that shut down in 2021.
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